12/22/2008 @ 6:00AM

Steve: Saving Detroit

In the 1960s, General Motors held back on sales because it feared an antitrust suit. Now it’s going to the government with a tin cup.

The U.S. auto industry can regain its prestige and profitability, but a bailout alone won’t do it. Ford, GM and Chrysler need structural changes so profitability will become a possibility.

U.S. automakers usually make good money overseas. GM and Ford make very good small, fuel-efficient cars in foreign markets. But theyre not allowed to bring them into the U.S. It’s madness. Let them import the cars they build overseas. Thrifty Americans will love them.

All parties must sacrifice. Shareholders are already virtually whipped out. Bond holders will take a big bath, losing at least two-thirds of their principle. Top executives will suffer big pay cuts. Labor must also make concessions now in order to preserve jobs and opportunity in the future.

Among the changes: flexible work rules, such as we see in American facilities of foreign automakers. Big reforms are needed on fringe benefits–the cash pay difference between workers of the Big Three and those working here for foreign auto companies is not that big.

Such basic changes will turbo-charge Detroit and make it a source of tax money for Washington instead of a recipient of money from taxpayers.